ST Engineering (STE) reported its 1Q15 results this morning, where revenue slipped 2.6% to S$1511.4m, mostly affected by difficulties faced by its US shipbuilding operations. Reported net profit slipped 5.3% to S$130.0m; we estimated that core earnings fell by a smaller 2.2% to S$142.9m. We deem these results to be broadly in line with the company’s guidance as well as our forecast, given that topline met about 23% of our FY15 forecast, while core earnings met 26%.

Going forward, STE continues to expect 1H15 revenue to be comparable, while PBT is expected to decline against 1H14; Marine is expected to show lower revenue and PBT; Aerospace and Electronics to see comparable performance; Land Systems to see higher revenue but lower PBT. For the full-year, STE has maintained its comparable guidance for both revenue and PBT. We will have more details after the analyst briefing. For now, we maintain our HOLD rating but may revise our S$3.33 fair value later.

Source: OCBC Research - 13 May 2015